Biotech Stocks' Q4 Earnings Due on Feb 7: VRTX, INCY and EXEL
A major chunk of pharma and biotech bigwigs reported results last week, with the earnings picture looking reasonably well. Quite a few are scheduled to report later in the week. Bellwether Johnson & Johnson JNJ and Swiss pharma giant Novartis beat on earnings but missed on revenues. Among the biotechs, Amgen and Bristol Myers beat estimates for both earnings and sales. Regeneron delivered better-than-expected fourth-quarter 2022 results even though lead drug Eylea sales declined. Gilead Sciences, Inc. GILD too beat on both earnings and sales on continued solid demand for its HIV portfolio and oncology franchise, driven by the cell therapy franchise and Trodelvy.
Per the Zacks classification, the pharma/biotech industry comes under the broader Medical sector, which comprises pharma/biotech as well as medical device companies.
Per the Earnings Trends report, as of Feb 1, 28.6% of the companies in the Medical sector, constituting nearly 51.1% of the sector’s market capitalization, reported earnings. While 81.3% beat earnings estimates, 62.5% beat the same for sales. Earnings increased 3.6% year over year on 7.6% higher revenues. Overall, fourth-quarter earnings for the Medical sector are expected to decline 9% on a 4.3% sales increase.
Let’s analyze three drug/biotech companies — Vertex Pharmaceuticals VRTX, Incyte INCY and Exelixis EXEL — that are set to report fourth-quarter 2022 results on Feb 7.
Vertex has a pretty impressive track record having beaten earnings estimates in three of the trailing four quarters. In the last reported quarter, it beat earnings expectations by 8.67%. It surpassed earnings estimates by 3.16%, on average, in the last four quarters. The company currently has an Earnings ESP of -1.54% and a Zacks Rank #3.
Per our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Vertex’s revenue growth in fourth-quarter 2022 is likely to have been driven by the rapid uptake of its blockbuster cystic fibrosis (CF) medicine, Trikafta/Kaftrio (Trikafta’s brand name in Europe). The Zacks Consensus Estimate and our model estimates for Trikafta sales are pegged at $2.04 billion and $1.99 billion, respectively. Sales of Trikafta in the to-be-reported quarter are likely to have been driven by strong uptakes in international markets and increased drug adoption in the United States among pediatric patients (6-11 years of age).
Vertex has a Zacks Rank #3, currently. You can the complete list of today’s Zacks #1 Rank stocks here.
Vertex Pharmaceuticals Incorporated Price and EPS Surprise
Vertex Pharmaceuticals Incorporated price-eps-surprise | Vertex Pharmaceuticals Incorporated Quote
Incyte’s earnings surprise history has been dismal so far, with its earnings beating the Zacks Consensus Estimate in only one of the trailing four quarters and missing on the other three occasions, with the average negative surprise being 20.11%. In the last reported quarter, Incyte missed earnings estimates by 16.67%.
For the quarter to be reported, Incyte has an Earnings ESP of -5.31% and a Zacks Rank #2
Patient demand for Incyte’s lead drug Jakafi a first-in-class JAK1/JAK2 inhibitor, in all approved indications (polycythemia vera, myelofibrosis and refractory acute graft-versus-host disease [GvHD]), is likely to have increased in the fourth quarter. Incremental sales from newly approved drugs like Opzelura are also likely to have added to sales in the fourth quarter.
Incyte Corporation Price and EPS Surprise
Incyte Corporation price-eps-surprise | Incyte Corporation Quote
Exelixis has an excellent earnings surprise history, with its earnings beating the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 99.57%. In the last reported quarter, Exelixis beat earnings by 24%.
Exelixis, Inc. Price and EPS Surprise
Exelixis, Inc. price-eps-surprise | Exelixis, Inc. Quote
For the quarter to be reported, Exelixis has an Earnings ESP of -50.00% and Zacks Rank #3.
Exelixis’ lead drug, Cabometyx, maintains momentum with continued label expansions and has likely propelled growth in the fourth quarter as well. The approval of Cabometyx for patients with advanced renal cell carcinoma as a first-line treatment in combination with Opdivo (nivolumab) fueled sales of the drug.
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Johnson & Johnson (JNJ) : Free Stock Analysis Report
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Exelixis, Inc. (EXEL) : Free Stock Analysis Report
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